Shares in Close Brothers Group PLC (LSE:CBG) fell 8% to 377.8p after the merchant bank said it will reduce its focus on providing finance for car and home insurance payments to concentrate on commercial lines insurance, hitting profits.
The move to deprioritise parts of its Premium Finance business follows rising competition and compensation claims in the motor finance subsector.
The FTSE 250-listed group cited rising service costs, broker consolidation and operational complexity as reasons for the change.
As a result, Close Brothers will exit broker relationships that lack a commercial lines focus, representing around 10% of its network and £330 million of its loan book. These relationships accounted for 4% of operating income in the first half of 2025.
The loan book is expected to decline 30% over the next three years, with a temporary hit to operating profit. The group aims to offset this through targeted growth in commercial lines and £20 million in annual cost savings by the 2030 financial year, supported by £15 million in investment to modernise systems and streamline operations.
Chief executive Mike Morgan said: "We are proactively shaping a more efficient and focused Premium Finance business by repositioning it towards commercial lines."
Close Bros said whilst it will be reducing the emphasis on personal lines insurance premium finance, "we remain fully committed to supporting all aspects of our commercial brokers' overall proposition, including their associated personal lines portfolio where applicable".
** Correction: the article had suggested that the firm is exiting the premium finance business, which is not the case, they are reducing emphasis on the personal lines business and instead focusing on commercial lines. **